The Most Influential Management Ideas of the Decade

SARAH GREEN: Welcome to the Harvard Business IdeaCast. I’m Sarah Green from Harvard Business Review. And I’m here today with Julia Kirby, HBR’s editor-at-large, to talk about the decade in management ideas.

Julia, thanks for talking with us today.

JULIA KIRBY: It’s great to be here.

SARAH GREEN: Julia, you wrote about 12 influential ideas for hbr.org. And our readers suggested a few more they’d include on the list. But let’s start with number one on your list: Shareholder value as strategy. Clearly if we’re talking about influential management ideas, it’s not always clear whether something is influential for the better or for the worse. Do you think that this idea is a basically good idea that just somehow lost its way?

JULIA KIRBY: Well you raise an excellent point at the outset, which is when we will embarked on this exercise of thinking about the past decade and what was the real news there in terms of management thinking, the first question that came to mind is should we be focusing on the ideas that we think deserve to endure? Or is this really an exercise about what were the ideas that really shaped management practice in this decade? And we decided to do the latter– kind of for good and for bad. And the first one that you’re talking about is absolutely something that worked to the bad in the past decade. It was a decade in which we saw the pendulum swing too far into this area of maximizing shareholder value or kind of optimizing decision making on that one set of stakeholders.

You also have seen a tremendous amount of backlash in the past decade against that very idea. For instance in our current issue of the magazine– in the January 2010 issue– we have Roger Martin suggesting a totally different stakeholder to optimize on, which is the customer. So he’s saying we’re entering the age of customer capitalism. So maybe that’s appropriate to start the new decade with that whole new focus.

SARAH GREEN: Although actually you mention the customer. And the customer of course was number three on your list. Of course, the idea that the customer is always right is a very old idea. But is listening to your customers a new idea or is it just that there was more volume in the past decade?

JULIA KIRBY: Yeah. Well those things kind of go hand in hand, don’t they? The customer chorus was kind of a label that we stuck on this amalgam of ideas because we just saw so many things going on in the ways that customers were making their voices heard and companies were learning to listen. And so this wasn’t anyone’s particular term– but areas like customer feedback– the kinds of ratings systems that you saw explode over the decade after being largely pioneered by amazon.com and things like Epinions at the very beginning of the decade.

And then also what you might call more guerrilla customer tactics– the kinds of things that you can do on YouTube– like “United Breaks Guitars’ was a huge phenomenon on YouTube that was basically one customer with a complaint, but finding a way to make his voice heard in a way that had to be responded to. So there was a lot going on in feedback mechanisms and in ways to work with those feedback mechanisms that felt like a totally new thing in this past decade.

SARAH GREEN: And of course a lot of that then enabled by the rise of the internet.

JULIA KIRBY: Absolutely. And Clay Shirky’s thought of Here Comes Everybody, if that’s a familiar book and set of ideas to you. It’s all that. It’s the ability of customers who find each other and start movements as activists essentially.

SARAH GREEN: And now I’d like to move on to another idea which was number four on your list, which was enterprise risk management. It’s inclusion on the list– and then you nodded at this in the piece– it seemed a little ironic almost considering the decade started with 9/11 and ended with the entire financial system teetering on the brink of collapse. So is this perhaps more of an idea that we needed to have? Maybe it didn’t get quite right. Or was this a new idea? How do you see that fitting in?

JULIA KIRBY: Right. It is kind of an ironic thing to declare this to have been any kind of decade for risk management because of some of the spectacular failures of predicting and even responding to risk– and that we could throw in Katrina as well. But there really was this huge step forward in the way that companies approached risk. And probably it’s because they started to see these large scale risks as being greater threats to their ability to operate globally. And that was to think of it in terms of enterprise risk. So instead of having lots of little pockets of risk management– so dealing with risks in the supply chain– those executives, looking at their own little neck of the woods. And meanwhile on the financial side, you have the hedging experts. And you had risk management essentially distributed all around the organization, but not brought onto one radar screen, not brought under one kind of purview. And that’s what you saw happening in this past decade– this set of tools and approach to do risk management at the total enterprise level.

SARAH GREEN: And now speaking of risk and sort of where we may be going in the future, the final idea on the list was sustainability. And obviously climate change presents huge risks to companies going forward. So where is that idea right now? And how did that make its way onto the list?

JULIA KIRBY: Yeah. Well– and I should quickly make clear that the order of these ideas was completely random. There’s no sense of what should have come first in terms of importance. But we do say probably if there’s one idea that more than anything defines this decade, it was the going green of business and the embracing of the sustainability agenda. And in some cases you see it being called greenwashing. In some cases it is greenwashing. But that does not take away from the really serious and sincere efforts that are being undertaken by so many companies to think about their footprint– their emissions, their various impacts on their environment– and do something about those that are positive.

SARAH GREEN: Our readers suggested a few things that they thought we missed. And I wanted to ask you about those. These included outsourcing, disruptive innovation, the focus on employee engagement that we saw over the past 10 years, corporate responsibility. What are some of the ideas you think that our readers suggested– that how those fit into this?

JULIA KIRBY: There was a lot of good thinking that came back, I guess more to the point of our customer chorus. We experienced it ourselves. And I guess just to back up and make one point. When we started on this exercise as editors, we sort of entered it as thinking, gee, I don’t know if there really was all that much news in management thinking in this past decade. It felt like a lot of the huge breakthroughs had happened earlier. And the first couple of things we thought of, we thought, oh well, that was already in the air around 2000. But as we got into it, we realized how much progress had been made in management thinking and how many really high impact ideas had percolated up in the past 10 years. And so seeing the response that we got back from our readership only intensified the sort of sense of energy that we had about this whole exercise. It really was an important decade.

Now having said that, a couple of the ones that you just mentioned– outsourcing and disruptive innovation– those were things that we thought of. And then thought, oh, you know we really can’t make a claim that that is a phenomenon of this decade. Both of those things were sort of well under way in the prior decade or decades. Outsourcing of course a huge long-term trend. I think what you saw on this past decade was maybe it hitting the average person in a way it hadn’t before. So it kind of reached a level of impact that it was felt more. And of course you saw some more sophistication about how companies approached that. But it wasn’t particularly a new piece of management thinking.

Disruptive innovation of course– Clay Christiansen’s great work in that realm– was done before the turn of the millennium. So it’s great to see that set of ideas take hold in management practice. And that’s what we’ve seen. But again, a slightly older set of ideas than we wanted to focus on in this list.

Now in terms of employee engagement, when I read that from one of our readers, I thought yes absolutely, we are nailed on that one. We should have thought of that one. Because that is really big news. And a big shift in the world of talent management, people management– that sense that you don’t need to just worry about maybe employee satisfaction. You’re certainly far past worrying about whether employees just show up. Because it’s not about time clock anymore. It’s about bringing the energy and level of engagement to your work that will make you do creative great work. That’s what people are trying to get their arms around now. That’s a big term and a big set of ideas.

I guess the last point that we got from the reader response was that there wasn’t anything on our list that looked at leadership. And so you might think well, does that mean that this was a terrible decade for leadership? I guess what we have found again and again is that new leadership thinking doesn’t emerge often. And I think it is possible for a decade to go by without a huge new set of ideas about leadership.

But I will say that the one that we considered that I think is important is all the discussion that we heard around this term authenticity in the past 10 years. That really was a big theme of leadership thinking with people like Bill George writing about the topic and others in the Harvard Business Review and elsewhere. We thought about it. It didn’t quite rise to the level of the ideas that we decided to include on the list in terms of the real impact we saw in practice.

SARAH GREEN: I wanted to ask you before we wrap up about one more thing, which was about China and India and emerging markets. Because that’s something we’ve seen covered a lot in the business press. But it doesn’t quite have a management idea attached to it. Or does it?

JULIA KIRBY: Yeah. And maybe that’s an idea in itself. The idea that management has become a global phenomenon may be the point there. That we no longer speak of emerging economies– emerging market practices– as being something other than management practice elsewhere. And we’re really seeing the emergence of global practices along with the growth of global corporations.

I do think that we saw some maturity happen in the past 10 years in terms of how we think about globalization and how firms see the value or their mission– their strategy– in emerging economies. It started out I think at the beginning of the decade and earlier with large companies seeing emerging economies as being the source of goods or materials– raw materials– and then increasingly cheap labor. And then of course as those economies grew and they developed middle classes, people in multinational companies started to understand that those were rich markets to start to pursue. And at this point I think you’re seeing an increasing focus on those markets and the needs of those markets. And so you’re seeing things like for instance reverse innovation where we look first to the market in the emerging economy, optimize on the needs of those customers, and then bring those innovations back home.

SARAH GREEN: Well– and of course in the next decade, we’ll see all that play out much more than this decade.

Julia, thank you so much for talking with us today.

JULIA KIRBY: Thank you. And I have to say, I cannot wait to see what this decade will bring.

SARAH GREEN: Hopefully, a big new leadership idea.

JULIA KIRBY: At least.

SARAH GREEN: That was Julia Kirby. For the full list of 12 management ideas of the past decade, please go to hbr.org. And as always, please send your feedback to IdeaCast at hbr.org. Thanks.